The following is a condensed version of "Get Woke, Go Broke?" by James E. Hartley, published at Law & Liberty. 

“Woke Capitalism is a growing and troubling dimension of contemporary economic and political life, especially among the mammoth multinational corporations that dominate so many aspects of our lives.” Such laments have become omnipresent in conservative circles. What is surprising is that the quotation is from a very proud progressive. Carl Rhodes in Woke Capitalism: How Corporate Morality is Sabotaging Democracy is greatly disturbed by the “naive, if not gullible” liberals who celebrate woke corporations.

 On the criterion of rhetorical ferocity directed at corporations adopting progressive political causes, Rhodes yields nothing to the conservative critics he so clearly despises. But, before celebrating this unification of the Left and the Right, we should note a fundamental difference. In the phrase “Woke Capitalism,” which word is problematic?

For conservatives the problem is “Woke.” As Milton Friedman famously argued, it is the manager’s job to maximize the returns to the owners of a firm. The problem with Woke Capitalism is CEOs who have decided to pursue other goals, regardless of or even to the detriment of the company’s profitability.

Rhodes, on the other hand, believes the problem is “Capitalism.” The problem is not that corporations are voicing agreement with causes Rhodes embraces. The real problem is that corporations have not yet committed themselves to a suicide pact.

The book raises a rather provocative question for conservatives. When you draw the battle lines over the desirability of progressive political causes, then it is quite natural for conservatives to see corporate leaders as becoming shills for the other side. Rhodes, however, thinks that battle line is misdrawn. He argues the divide is over the desirability of profit maximizing businesses. As Rhodes sees it, Woke Capitalism is a problem because it deceives people into thinking corporate leaders are focused on something other than profits.

Here is the troubling question: what if Rhodes is right about the real goal of Woke Capitalists? Using Friedman’s formulation, the responsibility of business leaders is to make profits. To make profits, it is necessary to persuade people to buy your product. Suppose for a moment that embracing progressive causes results in higher profits for a company. Suppose the customer base for a company likes progressive causes and is more inclined to buy products from companies which share their values. If that is true, then what should a firm do if it wants to follow Friedman’s mandate that the sole responsibility of the business is to make profits?

Before thinking about the implications of that question, we should first examine the presupposition. In popular cadence, if a firm gets woke, does it really go broke? Both opponents and proponents of corporations adopting progressive causes will happily provide you with lots of anecdotal evidence. Nike’s sales rose after the Kaepernick ad; Bud Light’s sales fell after the Mulvaney promotion. Finding anecdotes that confirm initial biases is easy; finding dispassionate studies which are persuasive to people who disagree is impossible.

But, set aside the question about whether wokeness is or is not profitable; that is not actually the right question. Imagine that a CEO believes that a woke advertising campaign will be profitable. After all, advertising is not an exact science; if it was, there would never be failed ad campaigns. If a business leader believes it will be good for profits to embrace wokeness, then what should the business leader do? It seems a bit odd for people to argue that businesses should focus on profits, but that a business should not adopt progressive causes when the managers believe it will be profitable to do so.

Thought about in this way, a curious conclusion arises. If you are convinced that a firm that gets woke will go broke, then what is the problem with Woke Capitalism? Won’t the firms adopting progressive positions die out? The real problem for conservatives occurs if wokeness is profitable. The real problem is if Woke Capitalism is just a cynical form of profit-maximizing behavior. If it is profitable, then shouldn’t Woke Capitalism be encouraged?

Thinking about the implications of these questions makes it obvious that the debate over Woke Corporations is just a proxy war for the debate over the best set of cultural norms. In a society which is deeply divided on this question, is it any surprise that businesses have realized that joining the Culture War in selective ways may be a means of attracting new sales? Such a strategy might fail, but it also might work. In a free market, every business decision comes with risk; if you want to avoid risk altogether, stay out of the marketplace. If you want to win the Culture War, though, instead of complaining about firms trying to maximize profits, it would be better to focus on the moral–cultural institutions.

James Hartley is Professor of Economics at Mount Holyoke College.